We Studied 38 Incidents of CEO Bad Behavior and Measured Their Consequences

Most boards of directors know what to do when their CEO is accused of illegal activity. They conduct an independent investigation, and if the allegations are verified, they take corrective action. In most cases, the CEO is terminated. It is much less obvious what actions the board should take when the CEO is accused of behavior that is questionable but not illegal. For example, if the CEO makes controversial public statements, has personal relations with an employee or contractor, or develops a reputation for being rude, overbearing, or verbally combative, the board must decide what merits investigation. It must also decide whether to address matters publicly or privately. These decisions become even more important when CEO misbehavior is picked up by the media, bringing unwanted public attention that can have an impact on the organization and its reputation.